What the Fed wanted to accomplish. But the bond market hasn’t been playing along and “is too complacent” about the coming onslaught.
Debt doesn’t matter. Until it does. And now it does.
Debt has a nasty habit of ruling the financial world of any entity, whether it’s a household, business or nation.
The Fed’s QT is happening for the first time simultaneously with the refilling of the TGA. Both draw liquidity from markets.
We shoulda known better.
The good folks in Congress are surely too worried about their own wealth, and sheer greed will keep them from pushing the US into default. But…
The government can manipulate the gross national debt to keep it below the debt ceiling while issuing new debt. But not for long. Then the game is over.
But the Chinese Renminbi didn’t make any progress at all last year.
Inflation is an enemy of the people, but it’s a friend of government recklessness.
Higher rates eventually enforce a sort of discipline on the drunken party in government and even in the private sector. That would be a good thing.